As many marina people in the industry know, Amendment 6 in Florida passed… by a whopping 70.5 percent! Amendment 6 requires that all Florida marinas must be assessed via value in use. It is a very big deal because this may be the beginning of a trend for marinas to receive “assessment breaks” similar to that enjoyed by farms throughout the country. 
Now that we’re all giddy, let’s take a look at that cloud we’re sitting on. It may have a dark lining.
- The main effect of Amendment 6 will be on land assessments. No longer can they be based on nebulous “development potential” such as waterfront high-rise condominiums. That means the land portion of the marina assessment will require reappraisal. Since it takes effect on January 1st, 2010, that means that next year is going to be an even busier time for assessors.
- Governments are under the most severe financial constraints seen since the early 1980’s. A trend that started this year is for a huge wave of tax appeals. Since in many jurisdictions you can file a tax appeal for three years back, only in 2010 will it be financially feasible to file for multiple years for many properties. So expect the docket for tax appeals to increase beyond the record amounts for this year. Maybe that means governments will be willing to lower more assessments just to get them off the docket to make room for the other tax appeals or maybe financial constraints will put so much pressure on assessors that they will resist as much as possible. Only time will tell which of these two diametric forces shall rule.
- Marinas are hard properties to appraise. I have heard it testified that “no two marinas are alike”. They require more time and effort to get right, but assessors will likely have less time than ever.
- Until recently we were in a period where the volume of marina sales was extremely low. Now there are lots of listings and the first wave of foreclosure sales and workouts has begun. That means assessors will need to separate distressed sales from market sales. That means more time doing so. That also means that a fresh wave of sales will need to be analyzed. No, using that 2003 sale won’t work anymore.
- Assessors will need to consider listings. If not, it becomes really hard to justify an assessment above that of a very comparable listing in a tax appeal.
- When you’re dealing with investment grade real estate, financial statements between same property types are quite linear. Only the simplest of marinas have the same accounting line items. Ah, but when you consider that many marina owners have payrolls that include family members, salaries that reflect “entrepreneurial profit” and not “the market”, expense line items that include their boat and cars, and other personal line items, just using the existing financial statements may not be accurate. Rather than adjusting, it is possible that assessors will not use those statements and go with higher numbers that may be above or equal to market value.
- Interdependent marinas will create an opportunity for over-assessment. An example is the marina that has slips and lodging but uses a marina a half mile away for repairs (both of which are owned by one parent company). Individually they may not be “full service”, but together they may be. Will each be assessed as “full service” or will this division be recognized?
- I’ve gone through the difference between buildable land and unbuildable wetlands in depth (via a six-part blog series). Now that land values will be reassessed, will this be recognized by assessors?
- The marina with entitlements (approvals for residential development) will need to be reassessed using unapproved land sales and sales that do not reflect upside potential. That greatly constrains the selection of land sales to those that are recent in time.
What I am getting at is that land assessments should go down, but will they go down to a level that truly reflects today’s land value? Will the assessors have enough time to assess them correctly considering all the above? Answering “yes” is a dangerous assumption.\
